The archived blog of the Project On Government Oversight (POGO).

May 13, 2010

Grassley Proposes FinReg Amendment That Would Strengthen Independence of IGs

Senator Charles Grassley (R-IA) has introduced an amendment to the financial regulatory reform bill that would strengthen the independence of certain agency-appointed inspectors general (IGs), including those that serve as watchdogs at our nation's financial regulatory agencies.

POGO has just sent a letter to the Senate in support of the amendment, which would require IGs that are designated federal entities (DFEs)—meaning the IGs are appointed by their agency heads—to report to the entire board or commission at their agencies. The amendment would also require a 2/3 vote by the entire board or commission to remove a DFE IG. This proposed structure would make it difficult to remove an IG for political reasons.

As stated in the letter:

Especially in the aftermath of the recent financial crisis, the work of IGs is absolutely essential to ensuring that our financial regulatory agencies work in the public’s best interest, and it is imperative that these IGs have the authority do their job without political interference.

The amendment would affect the IGs for the Securities and Exchange Commission (SEC), the Federal Reserve System, the Commodity Futures Trading Commission (CFTC), the National Credit Union Administration (NCUA), the Pension Benefit Guaranty Corporation (PBGC), and the new Bureau of Consumer Financial Protection.

Current financial reform legislation would convert the IG position at these agencies—which are currently classified as DFEs—into presidential appointments. But as we explain in the letter, the Grassley amendment provides a better solution for strengthening the independence of these IGs.

Find out more in our letter urging the Senate to support the Grassley amendment, which is co-sponsored by Senator Claire McCaskill (D-MO). You can also find other ideas for strengthening the independence DFE IGs, such as granting the capacity of the IGs to subpoena documents and testimony from entities regulated by their agencies, in POGO's testimony before Congress last year.